To Chip or Not to Chip? (Insights from a HITEC Orlando Guest Blogger)

Written by: Jennifer Jones

Last year at HITEC Dallas 2021, I blogged about the infamous chip shortage that caused headaches all over our industry in regards to procuring a lot of the necessary electronics hotels depend on. This year, I wanted to do a spin on another chip-related topic, but this time involving credit cards.

When credit card with chips were introduced in the U.S. back around 2015, we were instructed from our vendors how important it was to implement EMV payment devices at our front desks to accept chip transactions over traditional swiping. We also had to make sure all manual “card not present entries” were point-to-point encrypted. Credit card processors and gateway vendors promoted that a chipped transaction presented lesser risk and thus, a lower processing fee for a card present transaction. As chips were a mechanism to reduce fraud, it was a safer way to accept payments rather than swiping the magnetic stripe. Most hoteliers reacted, purchased necessary hardware and upgraded software to be compliant. It cost a lot of dollars, but in order to circumvent fraud and prevent chargebacks, most organizations obliged.

When the pandemic hit, we saw a lot of contactless technologies hit the market, many of which introduced guest mobility functionality — where a guest could use their own mobile device to check-in, for example. During the mobile check-in experience, applications were asking for the guest to enter their payment details and when a room became available, a mobile key could be generated to allow the guest to arrive, swiftly pass the front desk and go directly to their room — without ever chipping their card.

Now that the pandemic is behind us and travel is back in full force, the contactless experience has remained. Not only have travelers gotten used to it, but hotels are also suffering tremendously with hiring enough staff to provide adequate levels of service and the contactless, mobile experience for guests has helped with the labor shortage. So yet again, we are continuing to take credit card authorizations and settlements without always chipping a credit card via an EMV device.

So, I want to know….to chip or not to chip?

I’ve visited a few vendors in the HITEC floor to see if I could finally debunk the chip myth. Turns out, a guest entering their own credit card via the Internet should be considered an e-commerce transaction. Granted, not all online check-in platforms use an e-commerce Merchant ID (MID) and instead utilize the hotel’s lodging MID, which is connected to the gateway used for the PMS. Therefore, this still leaves the merchant at risk for dealing with chargebacks. The only way merchants can truly protect themselves is by implementing 3-D Secure, although most agree that this could make the online check-in process clunky for the guest. Therefore, most accept the risk and proceed without it. 3-D Secure is purely for fraud protection, where an individual inputting their card details online must prove that they are indeed the cardholder. It removes the risk of stolen card details being used to purchase services or goods.

This removal of risk dramatically decreases the risk of chargebacks. In addition, card brands have shifted the liability away from merchants for chargebacks if the transaction in question was completed using 3-D Secure. Of course, that is a huge win for hoteliers that are tired of fighting chargebacks claims.

So, when implementing applications that require guests to enter credit card details online, it may make sense to compare options and acknowledge those that can support 3-D Secure in a non-intrusive way to the guest experience. I am not sure if we will ever have a clear answer on the best way to proceed. It is definitely food for thought on another chip-related topic. (Thanks to Adyen and b4checkin for spending time with me to help craft this topic!)

Jennifer Jones is president of J2 Hospitality Solutions and an official event guest blogger for HITEC Orlando 2022, which took place June 27-30 at the Orange County Convention Center in Orlando, Florida USA. Read all her event experiences on HFTP Connect.

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